Making Tax Digital for landlords explained

Making Tax Digital (MTD) for Income Tax is a government initiative that changes how landlords report rental income and expenses to HMRC. Instead of a single annual Self Assessment tax return, in-scope landlords must keep digital records and submit quarterly updates throughout the tax year using HMRC-recognised software. This guide explains what it means in plain English. Reviewed May 2026.

What MTD for Income Tax is

MTD for Income Tax is the requirement to:

1. Keep digital records of your rental income and expenses
2. Submit a summary of those figures to HMRC four times a year (quarterly updates)
3. Use software that connects directly to HMRC to make those submissions

It is designed to replace the traditional annual Self Assessment process for in-scope landlords. Rather than adding everything up at the end of the year, you report income and expenses on a rolling quarterly basis.

Who it applies to

MTD for Income Tax applies to landlords (and self-employed individuals) whose qualifying income — rental income plus any self-employment income — exceeds HMRC’s income threshold.

If your qualifying income is below the threshold, you are not required to use MTD for Income Tax, though you can still choose to do so voluntarily.

What it means in practice

Digital record keeping

You must keep records of your rental income and expenses in a digital format throughout the year. This does not mean a spreadsheet on its own — the records must be kept in software that can connect to HMRC’s MTD systems.

Quarterly updates

You submit a summary of your income and expenses to HMRC four times per year. A quarterly update is not a tax payment — it is a record of your figures so HMRC can track your position through the year.

The four quarters follow the tax year pattern:

• Quarter 1: 6 April to 5 July
• Quarter 2: 6 July to 5 October
• Quarter 3: 6 October to 5 January
• Quarter 4: 6 January to 5 April

End-of-year

After the four quarterly updates, you still need to complete an end-of-year process — finalising your figures and submitting a final declaration. This replaces the Self Assessment tax return.

What has not changed

• You still pay tax through Self Assessment until HMRC updates the end-of-year process
• The categories of allowable expenses for landlords remain the same
• MTD does not change what you are taxed on — only how and when you report it

Common mistakes

• Assuming a spreadsheet is enough — standalone spreadsheets do not meet the MTD digital record-keeping requirement unless they connect to HMRC through a bridging tool
• Not signing up with HMRC — software alone is not enough; you need to complete HMRC’s own MTD sign-up
• Mixing personal and business transactions — keeping personal transfers separate from your allowable expense records is important for accurate quarterly totals
• Missing a quarterly deadline — late submissions can result in penalty points under the new points-based penalty system

How TenancyVault helps

TenancyVault is designed for landlords who want to manage their MTD records and quarterly submissions themselves. You can:

• Keep digital income and expense records per property
• Import bank statements (CSV or PDF) and review transactions
• Connect your HMRC account and check your MTD status
• Submit quarterly updates directly to HMRC
• Amend a submitted quarter if needed
• Retrieve your HMRC calculation feedback

The workflow is written in plain English — no accountant-speak required.

Related guides

• Quarterly updates explained
• How to keep digital records for rental income
• Quarterly deadlines for landlords

Not legal or tax advice. This guide is for information only. If you are unsure about your MTD obligations or tax position, consult a qualified accountant or tax adviser.